Question 27
NECO_MODEL_QUESTIONS_VOL1
•
2017
•
FINANCIAL_ACCOUNTING
•
objective
A trial balance shows total debits of \(\text{₦}950,000\) and total credits of \(\text{₦}945,000\). The following errors are later identified: (i) a sales return of \(\text{₦}12,000\) was recorded on the credit side instead of debit; (ii) a purchase of \(\text{₦}7,500\) was omitted; (iii) a bank loan of \(\text{₦}20,000\) was entered as \(\text{₦}2,000\) on the credit side. After correcting all three errors, what amount should be transferred to the suspense account, and list the correcting journal entries.
Answer Options
A.
Credit suspense account with \(\text{₦}20,500\); correcting entries - Debit Sales Returns \(\text{₦}12,000\) / Credit Sales \(\text{₦}12,000\); Debit Purchases \(\text{₦}7,500\) / Credit Accounts Payable \(\text{₦}7,500\); Credit Bank Loan \(\text{₦}18,000\) / Debit Suspense \(\text{₦}18,000\)
B.
Debit suspense account with \(\text{₦}18,500\); correcting entries - Debit Sales Returns \(\text{₦}12,000\) / Credit Sales \(\text{₦}12,000\); Debit Purchases \(\text{₦}7,500\) / Credit Accounts Payable \(\text{₦}7,500\); Credit Bank Loan \(\text{₦}18,000\) / Debit Suspense \(\text{₦}18,000\)
Correct Answer
C.
Credit suspense account with \(\text{₦}18,500\); correcting entries - Debit Sales Returns \(\text{₦}12,000\) / Credit Sales \(\text{₦}12,000\); Debit Purchases \(\text{₦}7,500\) / Credit Accounts Payable \(\text{₦}7,500\); Credit Bank Loan \(\text{₦}18,000\) / Debit Suspense \(\text{₦}18,000\).
D.
Credit suspense account with \(\text{₦}18,500\); correcting entries - Debit Sales Returns \(\text{₦}12,000\) / Credit Sales \(\text{₦}12,000\); Debit Purchases \(\text{₦}7,500\) / Credit Accounts Payable \(\text{₦}7,500\); Debit Bank Loan \(\text{₦}18,000\) / Credit Suspense \(\text{₦}18,000\)
Correct Answer
C
Correct Option:
Credit suspense account with \(\text{₦}18,500\); correcting entries - Debit Sales Returns \(\text{₦}12,000\) / Credit Sales \(\text{₦}12,000\); Debit Purchases \(\text{₦}7,500\) / Credit Accounts Payable \(\text{₦}7,500\); Credit Bank Loan \(\text{₦}18,000\) / Debit Suspense \(\text{₦}18,000\).
About This Question
This is
Neco Model Questions Vol1
2017
Financial Accounting
Question 27.
It is one of the
objective
questions from the
2017
Neco Model Questions Vol1
Financial Accounting
examination.
Difficulty level:
Medium
.